The lending process entrusts some work contents to socio-political organizations through the Savings and Credit Group according to current regulations of the Vietnam Bank for Social Policies.
(1)
(6)
Borrower
(6)
Savings and
loan
(7)
(2)
(5)
Main organization
social
Social Policy Bank
festival
(3)
(4)
Poverty Reduction Committee
Commune, Commune People's Committee
(5)
Diagram 2.2: Lending process with GQVL program trust
Step 1: The borrower writes a Loan Application and sends it to the Savings and Credit Group in the village or residential group where the borrower is legally residing;
Step 2: The Savings and Credit Group receives the borrower's loan application, holds a loan review meeting under the witness of the commune-level social-economic organization, checks the elements on the loan application, then makes a list of loan applications with a loan application form and submits it to the commune-level People's Committee for confirmation;
Step 3 : After receiving confirmation from the Commune People's Committee, the Savings and Credit Group sends the entire loan application to the Social Policy Bank;
Step 4 : Within 10 working days from the date of receiving the loan application, the Director of the People's Credit Fund assigns a credit officer to check and compare the legality and validity of the loan application, submit it to the Head of the Planning - Credit Operations Department/Head of the Planning - Control Operations Team, and submit it to the Director of the People's Credit Fund for consideration and approval;
- For customers borrowing capital from capital sources managed by the Provincial People's Committee: The Chairman of the District People's Committee will consider and approve;
- For loans from capital sources provided by the Central agencies of the Vietnam General Confederation of Labor, the Vietnam Cooperative Alliance, and the Vietnam Association of the Blind,
The Vietnam Women's Union, Ho Chi Minh Communist Youth Union, Vietnam Farmers' Association, and Vietnam Veterans' Association shall be managed by the heads of provincial agencies of the above organizations for consideration and approval;
- For customers borrowing from capital mobilized by the Social Policy Bank and capital entrusted by the Social Policy Bank from localities, organizations and individuals at home and abroad, the Director of the Social Policy Bank shall consider and approve.
Step 5 : The People's Committee at the commune level notifies the commune-level social-economic organization (the unit entrusted with the loan) and the savings and credit group.
Step 6 : Commune-level CT-XH organizations and Savings and Credit Groups notify borrowers of the Bank's approval results.
Step 7 : Borrower goes to the transaction point at the commune or the headquarters of the People's Credit Fund to receive the loan.
2.2.3.2. Results of implementing loan activities to create jobs at the Social Policy Bank, Hanoi Branch in the period 2018-2021
Currently, the subjects using GQVL loans mainly serve livestock, poultry, and aquaculture, accounting for 55%, cultivation 35%, and the remaining 10% is for services and small business. Loans are integrated into local project programs to help unemployed poor households have enough capital and expenses for cultivation, livestock, small business production as well as help form specialized areas for food crops, foodstuffs, industrial crops, and restore traditional craft villages. Through loans, poor households, near-poor households, farms, and production and business establishments have increased their income. Every year, they have attracted and created jobs for over 30,000 local workers, contributing to the goal of poverty reduction, job creation, and ensuring social security in the capital. That affirms the great economic and social efficiency of job creation loans. The GQVL lending activities at the Social Policy Bank, Hanoi Branch have achieved certain results during the implementation process, clearly shown in the following table:
Table 2.2. Results of implementing GQVL loans at the Hanoi City Branch of the Vietnam Bank for Social Policies in the period 2018-2021
Unit: billion VND
STT
Target | 2018 | 2019 | 2020 | 2021 | |
1 | Loan Sales | 3,270 | 1,961 | 3,512 | 3,946 |
2 | Debt collection turnover | 2,330 | 1,061 | 1,375 | 1,979 |
3 | Debt Clearance Sales | 0.17 | 0.15 | 0.14 | 0.02 |
4 | Total outstanding debt | 2,776 | 3,677 | 5,813 | 7,780 |
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( Source: Annual report of Hanoi City People's Credit Fund)
Through the data table, we can see that the loan turnover in this period is always greater than the debt collection turnover, which proves that there is development and growth in capital sources. In 2018 and 2019, the loan turnover is greater than the debt collection turnover by 940 billion VND and 900 billion VND, respectively. In 2020 and 2021, there is a strong growth in loan turnover, both greater than the debt collection turnover by 2,137 billion VND and 1,967 billion VND. The reason for the strong growth in loan turnover is that in the period of 2020-2021, the Hanoi Branch of the Social Policy Bank received capital entrusted by the city, districts and towns to increase support for loans to solve employment for workers affected by the Covid-19 pandemic.
Debt forgiveness turnover has decreased gradually over the years, from 170 million VND in 2018 to 20 million VND, an average decrease of 35% over the years. The decrease in debt forgiveness turnover proves that the quality of GQVL loans at the branch is increasingly improving. GQVL lending activities tend to develop well.
Total outstanding loans have grown over the years. In 2019, outstanding loans for GQVL increased by 32% compared to 2018. In particular, in the period of 2019-2021, there was strong growth from VND 3,677 billion in 2019 to VND 5,813 billion in 2020 and VND 7,780 billion in 2021. The strong growth in outstanding loans of the job creation loan program mainly comes from the capital entrusted by the city, district and county to the Branch for implementation.
Loans for job creation increased. In addition, due to new policy changes on increasing loan levels, simpler procedures, making it easier for people to access capital. This shows that job creation is an important goal in the development plan of Hanoi, when the poverty rate decreases, the economic structure shifts from agriculture to industry and services, leading to many people being unemployed. Therefore, the city prioritizes resources to implement loans for job creation, building new rural areas, and ensuring social security in the capital.
2.3. Current status of job creation lending activities at the Social Policy Bank, Hanoi Branch in the period 2018-2021
2.3.1. Current status of development of lending activities for job creation at the People's Credit Fund, Hanoi Branch according to quantitative indicators
Loan size for job creation
The scale of lending is clearly shown through the outstanding loan balance for job creation in the period 2018-2021.
Outstanding debt by lending method
Unlike commercial banks, where lending is done directly between the bank and the customer, at the Social Policy Bank, some lending programs entrust some work contents to social organizations. By building a transaction network to each locality through mobile transaction teams at the commune and ward levels and in combination with social organizations, the Social Policy Bank Hanoi Branch has carried out lending and debt collection activities effectively. This is the right direction, helping to transfer preferential loan capital to the right beneficiaries quickly and effectively; at the same time, mobilizing the strength of the community and the whole society to help the poor and other policy subjects. The outstanding debt situation by lending method in the period 2018-2021 of the Social Policy Bank Hanoi City is as follows:
Unit: Billion VND
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
7772
5804
3653
2443
Trust Lending
Direct lending
333
24
9
8
2018 2019 2020 2021
Figure 2.2: Outstanding loans for GQVL by lending method at the Social Policy Bank, Hanoi Branch, period 2018-2021
(Source: Annual report of the People's Credit Fund, Hanoi Branch)
The outstanding loans for GQVL at the Hanoi Branch of the Social Policy Bank are mainly entrusted loans through social organizations. The chart shows that entrusted lending activities are growing strongly, increasing from VND 2,443 billion in 2018 to VND 7,772 billion in 2021, an average increase of 47% per year. However, the direct lending method has decreased sharply, from VND 333 billion in 2018 to VND 8 billion in 2021, a decrease of VND 325 billion. At the branch, direct lending is all lending to production and business establishments. To effectively implement the entrusted lending method, the Hanoi Branch of the Social Policy Bank has regularly coordinated with social organizations, paying attention to building, consolidating and perfecting Savings and Credit Groups at the grassroots level. The Hanoi Branch of the Vietnam Bank for Social Policies provides loans to poor households and other policy beneficiaries, mainly through the entrustment method through social organizations. Through associations and unions at all levels, and Savings and Credit Groups, the lending activities of the Hanoi Branch of the Vietnam Bank for Social Policies have been strongly implemented throughout the city.
Outstanding debt by capital source.
Considering the origin of capital to form outstanding debt, central capital and mobilized capital will be combined as central capital for GQVL loans, and capital entrusted from city, district and county budgets is local capital.
Table 2.3: Outstanding loans by capital source at the People's Credit Fund, Hanoi Branch, period 2018-2021
Unit: billion VND
Yearly Target
Central capital loan for GQVL | Lending GQVL local capital | |||
Perform | Proportion (%) | Perform | Proportion (%) | |
2018 | 419 | 15.1 | 2,357 | 84.9 |
2019 | 913 | 24.8 | 2,764 | 75.2 |
2020 | 1,952 | 33.6 | 3,861 | 66.4 |
2021 | 2,602 | 33.4 | 5,178 | 66.6 |
(Source: Credit Planning Department - Hanoi City People's Credit Fund)
In terms of capital structure, the annual additional balance of the National Fund for Unemployment Assistance is still low. The growth in outstanding loans for Unemployment Assistance from central capital sources mainly comes from capital mobilization from organizations and individuals through savings deposits at banks; from 419 billion VND in 2018 to 2,602 billion VND in 2021, an increase of 2,183 billion VND, accounting for 33.4% of the total capital for unemployment assistance. The proportion of central capital sources is increasing, increasing by an average of 27% per year. This shows that the Branch has increased its autonomy in mobilized capital, gradually reducing the proportion of capital transferred by the central government and capital entrusted by localities.
Local capital for GQVL loans accounts for a large proportion of total outstanding loans, growing by an average of 30% per year, reaching VND 5,178 billion in 2021, accounting for 66.6% of total GQVL loans. The capital structure also has clear changes, showing that local authorities are very interested in GQVL lending policies, creating opportunities.
Association for development loans, improving the lives of poor households and other policy subjects in the area.
Loan balance ratio and growth rate over the years
Outstanding loans for job creation account for a large proportion of the total outstanding preferential loans of the Social Policy Bank, Hanoi Branch, which is clearly shown in the following table:
Table 2.4: Outstanding loan situation for GQVL at the Social Policy Bank, Hanoi Branch, period 2018-2021
Unit: billion VND
Target
2018 | 2019 | 2020 | 2021 | |
Outstanding loan balance GQVL | 2,776 | 3,677 | 5,813 | 7,780 |
Total outstanding debt | 7,280 | 8,283 | 10,166 | 11,786 |
Proportion of GQVL outstanding debt to total outstanding debt (%) | 38.1% | 44.4% | 57.2% | 66% |
Growth rate of outstanding loans GQVL | 29% | 32.5% | 58% | 34% |
(Source: Annual report of the People's Credit Fund, Hanoi Branch)
In the period 2018-2021, outstanding loans for GQVL had a high growth rate, accounting for a high proportion of total outstanding loans, continuously increasing over the years. In 2019, outstanding loans for GQVL increased by VND 901 billion, equivalent to an increase of 32.5% compared to 2018. In 2020 and 2021, outstanding loans continued to increase sharply, increasing by VND 2,136 billion compared to 2019; increasing by VND 1,967 billion compared to 2020, equivalent to an increase of 58% and 34% compared to the previous year.
Not only increasing in quantity, the proportion of outstanding GQVL loans in the total outstanding credit of the whole branch also increased continuously from 38.1% in 2018 to 66% in 2021. It can be seen that outstanding GQVL loans are increasingly accounting for a large proportion of the total outstanding credit of the branch. The branch's operational goal until 2025 is to continue to strongly develop GQVL lending activities, striving to reach
By 2025, the branch's GQVL loan balance ratio will reach over 80% of total outstanding credit balance, to compensate for the decrease in capital sources for lending programs for poor and near-poor households in the future.
Thus, the branch's GQVL lending activities have continuously expanded in scale and increasingly accounted for a larger proportion of total outstanding loans. This result is also due to the branch's increasingly improving service quality, simpler application procedures, maintaining good relationships with old customers, and strengthening propaganda to attract more borrowers. This is considered the branch's success in maintaining and expanding this lending activity.
The growth of the GQVL loan program's outstanding balance over the years has made the program account for the largest proportion of the total outstanding balance as of December 31, 2021. This is clearly shown in the chart below:
2% 3%
GQVL Loan
17%
Loans for poor and near poor households
Loans for newly escaped poverty households
10%
Loan for NSVS&MT
66%
1%
Social Housing Loan
Loans for other programs
Figure 2.3: Proportion of outstanding loans to GQVL in 2021
(Source: Annual report of the People's Credit Fund, Hanoi Branch)
In 2021, the outstanding GQVL loans reached VND 7,780 billion, accounting for 66% of the total outstanding loans. Currently, the source of capital for job creation accounts for the largest proportion of the total preferential loans of the Social Policy Bank, Hanoi Branch, due to the high unemployment rate in the capital. One of the reasons for the high unemployment rate is that Hanoi is in the process of development, urbanization, and conversion of land use purposes. In addition, the country's economy is in the process of